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The Solow Productivity Paradox in Historical Perspective

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  • Crafts, Nicholas

Abstract

A growth accounting methodology is used to compare the contributions to growth in terms of capital-deepening and total factor productivity growth of three general-purpose technologies, namely, steam in Britain during 1780-1860, electricity and information and communications technology in the United States during 1899-1929 and 1974-2000, respectively. The format permits explicit comparison of earlier episodes with the results for ICT obtained by Oliner and Sichel. The results suggest that the contribution of ICT was already relatively large before 1995 and it is suggested that the true productivity paradox is why economists expected more sooner from ICT.

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  • Crafts, Nicholas, 2002. "The Solow Productivity Paradox in Historical Perspective," CEPR Discussion Papers 3142, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3142
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    Cited by:

    1. Bayoumi, Tamim & Haacker, Markus, 2002. "It's Not What You Make, It's How You Use IT: Measuring the Welfare Benefits of the IT Revolution Across Countries," CEPR Discussion Papers 3555, C.E.P.R. Discussion Papers.
    2. Andrea Borsato, 2021. "Does the Secular Stagnation hypothesis match with data? Evidence from USA," Working Papers of BETA 2021-11, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. Cette, Gilbert & Mairesse, Jacques & Kocoglu, Yusuf, 2005. "Effets de la diffusion des technologies de l’information sur la croissance potentielle et observée," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(1), pages 203-230, Mars-Juin.
    4. Crafts, Nicholas, 2014. "Productivity Growth during the British Industrial Revolution: Revisionism Revisited," CAGE Online Working Paper Series 204, Competitive Advantage in the Global Economy (CAGE).
    5. Kriedel, Norbert, 2006. "Long waves of economic development and the diffusion of general-purpose technologies: The case of railway networks," HWWI Research Papers 1-1, Hamburg Institute of International Economics (HWWI).
    6. Jalava, Jukka & Pohjola, Matti, 2008. "The roles of electricity and ICT in economic growth: Case Finland," Explorations in Economic History, Elsevier, vol. 45(3), pages 270-287, July.
    7. Nicholas Oulton, 2002. "ICT and Productivity Growth in the United Kingdom," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 363-379.
    8. Pierre-Alain Muet, 2006. "Impacts économiques de la révolution numérique," Revue économique, Presses de Sciences-Po, vol. 57(3), pages 347-375.
    9. Recuero Virto, Laura & Bacache, Maya, 2009. "TIC et croissance économique [ICT and economic growth]," MPRA Paper 28254, University Library of Munich, Germany, revised 2009.
    10. Knick Harley, 2003. "Growth theory and industrial revolutions in Britain and America," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 809-831, November.
    11. Antonin Bergeaud & Gilbert Cette & Rémy Lecat, 2018. "The role of production factor quality and technology diffusion in twentieth-century productivity growth," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 12(1), pages 61-97, January.
    12. Cette, Gilbert & Mairesse, Jacques & Kocoglu, Yusuf, 2005. "ICT diffusion and potential output growth," Economics Letters, Elsevier, vol. 87(2), pages 231-234, May.
    13. Díaz Chao, A., 2003. "El efecto de las tecnologías digitales en la competitividad de la empresa española./The effect of digital technologies in the spanish firm competitivenses," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 21, pages 521-534, December.
    14. Sanchís Llopis, M. Teresa, 2005. "Disaggregated productivity growth and technological progress in the interpretation of Spanish economic growth, 1958-1975," IFCS - Working Papers in Economic History.WH dilf0503, Universidad Carlos III de Madrid. Instituto Figuerola.
    15. Gilbert Cette & Christian Pfister, 2004. "Challenges of the “New Economy” for Monetary Policy," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 27-36, Spring.
    16. R. Nahuis & H. van der Wiel, 2005. "How Should Europe’s ICT Ambitions look like? An Interpretative Review of the Facts," Working Papers 05-22, Utrecht School of Economics.
    17. Patrizio Pagano & Massimo Sbracia, 2014. "The secular stagnation hypothesis: a review of the debate and some insights," Questioni di Economia e Finanza (Occasional Papers) 231, Bank of Italy, Economic Research and International Relations Area.
    18. Gilbert Cette & Jacques Mairesse & Yusuf Kocoglu, 2004. "Diffusion des TIC et croissance potentielle," Revue d'économie politique, Dalloz, vol. 114(1), pages 77-97.
    19. Crafts, Nicholas, 2012. "Western Europe's Growth Prospects: an Historical Perspective," CEPR Discussion Papers 8827, C.E.P.R. Discussion Papers.
    20. Aránzazu Guillán Montero & David Le Blanc, 2019. "Lessons for Today from Past Periods of Rapid Technological Change," Working Papers 158, United Nations, Department of Economics and Social Affairs.
    21. Crafts, Nicholas & O’Rourke, Kevin Hjortshøj, 2014. "Twentieth Century Growth*This research has received funding from the European Research Council under the European Union’s Seventh Framework Programme (FP7/2007-2013) / ERC grant agreement no. 249546.," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 263-346, Elsevier.
    22. Tai-Yoo Kim & Jihyoun Park & Eungdo Kim & Junseok Hwang, 2011. "The Faster-Accelerating Digital Economy," TEMEP Discussion Papers 201173, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Apr 2011.
    23. Chadha, J.S. & Nolan, C., 2001. "Supply Shocks and the ‘Natural Rate of Interest': an Exploration," Cambridge Working Papers in Economics 0103, Faculty of Economics, University of Cambridge.
    24. A. Bergeaud & G. Cette & R. Lecat, 2016. "The role of production factor quality and technology diffusion in 20th century productivity growth," Working papers 588, Banque de France.

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    More about this item

    Keywords

    general purpose technologies; growth accounting; productivity paradox;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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